On Episode 863 of The Core Report, financial journalist Govindraj Ethiraj talks to Captain Sam Thomas, President at ALPA India as well as Garima Kapoor, Economist & Deputy Head of Research at Elara Securities (India).

SHOW NOTES

(00:00) The Take: India's Next Global Champion Should Be Built, Not Debated

(05:38) Markets set for a more stable start as the US and Iran seek off-ramp

(07:50) The party on Wall Street continues as markets hit new highs

(09:00) India’s high GST collections, because of increased customs collections

(16:44) Two more pilots died last week of health issues, what should airlines be doing?

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NOTE: This transcript contains the host's monologue and includes interview transcripts by a machine. Human eyes have gone through the script but there might still be errors in some of the text, so please refer to the audio in case you need to clarify any part. If you want to get in touch regarding any feedback, you can drop us a message on feedback@thecore.in.

Good morning, it's Monday, the 4th of May and this is Govindaj Ethiraj broadcasting and streaming weekdays from Mumbai, India's financial capital.

The Take: India's Next Global Champion Should be Built and Not Debated

It has been dubbed the most dramatic power shift in motorcycling history.

The company executing this manoeuvre is one that many Americans until recently had never even heard of. The changing of the guard did not happen overnight but the frontal assault officially began 11 years ago. In 2015, Chennai headquartered Royal Enfield, a subsidiary of the Aisha Motors Group, boldly opened its North American headquarters in Milwaukee, Wisconsin, right in Harley-Davidson's backyard and the epicentre of American motorcycling.

The stock market now reflects the sheer scale of the disruption that has followed. Harley-Davidson has been losing sales in recent years and its market capitalisation currently hovers around a diminished $2.7 billion. Aisha Motors is a valuation north of $21 billion.

The production disparity is equally stark. Last year, Royal Enfield sold over 1.2 million motorcycles globally. Harley-Davidson struggled to move much over 100,000.

Today, Royal Enfield exports more motorcycles than Harley-Davidson produces in total. Now the price points are of course quite different but if you want to understand why, look no further than the consumers. A quick survey of motorcycling enthusiasts and reviewers across platforms like YouTube reveals titles that range from how a $5,000 Indian bike is stealing Harley's future customers to how one small Indian brand just put Harley out of business.

The prevailing tone amongst the authors of these reviews, who are mostly American and British by the way, is a mix of dismay and anger directed at Harley-Davidson for losing the plot, trying to sell the same overpriced, overcomplicated heavyweights to an ageing demographic. Royal Enfield has been universally praised for returning to the fundamentals of the open road. They offer highly affordable, first-class motorcycles with a deliberately analogue feel.

Free from over-the-top electronics, these air-cooled machines appeal to both young and old riders who want a bike they can actually tune up in their garage. As one former Harley loyalist quipped, Royal Enfield models have replaced Harley-Davidson to me. They're affordable, classic-looking, and you can customise them.

Another one said, for the price of a single Harley, you can buy essentially two or more Royal Enfields. During his first term, U.S. President Donald Trump notably complained about India's tariff barriers on Harley-Davidson motorcycles. He wasn't wrong to point out the trade imbalances, but he missed the deeper structural irony.

Harley wasn't just struggling to export to India, it was taking direct punches from an Indian brand right on its home turf. An Enfield is winning on more than just price. With a 120-plus legacy as the oldest continuously produced motorcycle brand in the world, it successfully replicated the very thing that made Harley a titan, a fiercely loyal, well-nurtured global community with strong cultural roots.

Even back in India where right now Harley and British rival Triumph attempt to compete in the 400cc segment via joint ventures with Hero and Bajaj, the results tell a somewhat familiar story. While Bajaj's Triumph has found some success, the Hero-Harley partnership is making limited headway. There is a profound lesson here for the hand-dringers currently lamenting India's supposed lag in the next great technological frontier, artificial intelligence.

Every day the chattering classes engage in national breastbeating over whether India should develop its own large language models or LLMs to compete with the likes of Chad, GPT, or Claude, or simply adopt them to drive enterprise and personal productivity. The debate is largely a distraction. If a visionary wants to build an Indian LLM, they will secure the capital, assemble the talent, and build it.

They will not wait for validation from social media commentators or a government white paper. When A.I.SHA Motors bought a stake in a struggling Royal Enfield in 1990 and eventually acquired it fully, there were most likely no debates amongst armchair opinionators about whether India should export motorcycles. A.I.SHA simply scaled up a product that already existed, built the aura around it, and then marched into Harley's hometown quite literally.

If an engineering product seems too far, consider the pioneers of India's IT revolution. When N.R. Narayanamurthy, Nandan Nilukani, and their co-founders launched Infosys in 1981, they did not wait for a national consensus on the potential of software services. As they have noted on several occasions, the software industry flourished in India precisely because the government had no idea what it was.

Bereft of state meddling and central planning, the industry was spared the very help that would have throttled it. Innovation is almost best left to entrepreneurs armed with hunger, desire, and passion. The Royal Enfield story, like others, is a testament to the power of free enterprise and a solid homegrown success that should cut through the current air of economic despondency.

It's entirely incidental that A.I.SHA produces motorcycles. The broader takeaway is this. Global champions can emerge from anywhere in India, in almost any industry, perhaps even in large-language models.

But they will be built in the garages and boardrooms of driven founders, not in the common sections of their doubters.

And that brings us to our top stories and themes…

The stock markets are set for a more stable start as the U.S. and Iran, for now, seek an off-ramp.

The party on Wall Street continues as markets hit new highs.

India's economic imperatives two months into the war.

India's high GST collections, thanks to increased customs collections.

And two more pilots died last week of health issues. What should airlines be doing?

Markets, The War and Oil

The price hike started over the weekend. The government has raised prices of LPG used by industries and jet fuel for foreign airlines from Friday.

The price of a 19-kilogramme commercial LPG cylinder was hiked by Rs. 993 to Rs. 3071.

And ATF, that's aviation turbine fuel, was raised by about $76 per kilolitre to about $1,511 per kilolitre. Meanwhile, an Iranian proposal on negotiations with the U.S. sent crude oil futures falling on Friday. But prices were on track for weekly gains, even as the state of Hormuz was being blocked by both Iran and the U.S. Navy, according to a Reuters report.

Brent crude futures were at $108, down $2.2 a barrel. And West Texas intermediate futures were at $101.9, that's almost $102 a barrel. On Thursday, Brent June contracts had hit $126 a barrel, the highest since March 2022, before falling subsequently.

Back-home markets fell on Thursday, thanks to all of this. The Sensex fell almost 1,238 points, but then came back as crude prices eased during that session, and finally closed on 583 points to 76,914. The Nifty was down 180 points to 23,998.

Markets have recovered a large part of losses seen during the peak of the conflict last month, thanks of course to the ongoing ceasefire and a steady earnings season without too many surprises. So in April, the Sensex has now risen about 7% and the Nifty 7.5%, which is its best performance since December 2023, according to a Business Standard report. In March, the indices had fallen about 11.5% each, which in turn was their steepest drop since March 2020.

The rupee continued to get battered, and on Thursday, fell to Rs.95.33 per dollar, going past its all-time low of Rs.95.21 as it hit last month and finally closed at Rs.94.91 to the dollar. Meanwhile, Wall Street continues to party on like there is no tomorrow. The S&P hit a fresh intraday high on Friday, thanks to Apple shares, even as oil prices fell everywhere.

The Nasdaq Composite also hit an all-time high and closed at 25,114. Apple stock prices were up 3% after it posted a fiscal second-quarter earnings and revenue beat, and not only that, the company's revenue outlook for the current quarter was better than expected, overshadowing the fact that iPhone revenue was short of estimates for the second time in three quarters, according to CNBC. Meanwhile, the major organisation of petroleum-exporting countries plus nations have agreed to a modest and symbolic increase in their June production quota levels, as the group sends a business-as-usual message following the sudden and surprise exit of the United Arab Emirates last week, according to a Bloomberg report.

Seven countries, led by Saudi Arabia and Russia, will add about 188,000 barrels a day next month under the agreement. Back home, again, many Indian states are likely to see an above-average number of heatwave days in May, according to the Indian Meteorological Department. And all of this push energy demand to a record high.

GST Collections

India's Gross Goods and Services Tax, or GST, tax collections for April have touched a record high of Rs 242,000 crore, up 8.7% compared to the same month last year.

The jump was driven to some extent by net revenue from customs, going up almost 43%, far outpacing the 0.3% growth in net domestic revenue, indicating that external trade remained a key driver of collections during the month, according to an Economic Times report. The report also suggested that the data indicates no immediate disruption to business activity despite all the global uncertainties. The previous high for collections was April 2025 at Rs 2.37 lakh or Rs 237,000 crore.

So GST is one macroeconomic signal on how consumption is doing right now. What are the signals that we are seeing and what can we infer from them? I reached out to Garima Kapoor, Chief Economist at Elara Securities, and I began by asking her what were the key numbers that she was tracking right now.

INTERVIEW TRANSCRIPT

Garima Kapoor: So, I think the first order impact of the war has been felt clearly on the external sector and predominantly rupee. We've seen record outflows from FBIs and that has also borne the brunt on the rupee. On the domestic side, as yet, when we look at high frequency indicators, whether on growth or on inflation, barring an uptick on WPI because it largely reflects your importables, we are not seeing any significant move in any other indicators.

And that's partly because the policy makers have absorbed the shock. The government has not passed on anything, especially to the consumers, although the energy prices, particularly LPG, for the commercial users have been increasing and the ATF prices also have been increasing. But as yet, the deng to sentiment in terms of movement in relation to economic activity has not yet started to reflect.

In my assessment, in about a fortnight or so, once the data starts to come in, you should see the first order impact turn into second order, predominantly, let's say, in actions relating to services, basically your airport travel in terms of passengers, airports are handling, number one. Two, it should start to reflect in terms of your export numbers also, also because the month of March was largely not reflective of the high crude prices because you had forward contracts. And three, it should also start to reflect in other high frequency indicators, probably in terms of the economic services, in terms of eating out, hotel, boarding and lodging, because as the commercial cylinder prices are rising, their pass through will happen and that will impact or dent sentiments in terms of demand for some of these services.

Govindraj Ethiraj: Right. And are you seeing any impact on companies, numbers and so on? I know we've just passed one quarter and there obviously was not much impact.

But how are you looking at that ahead?

Garima Kapoor: See, the numbers so far have not shown or reflected the impact of war for two reasons. By the time the shortage became severe, it was probably a mid-March or somewhere thereabouts. And number two is that there were significant inventories across the board that had to absorb the shock.

More importantly, because demand as yet in the economy has not dented, it did not also reflect in the numbers in terms of top lines for significant number of companies. But the commentary has started to indicate a more cautious stance, especially with the cost of inputs, particularly supply chains relating to oil and oil substitutes and particularly that which transits the Strait of Hormuz, whether it is sulphur or substitutes in and around that. So I do believe it's the first and the second quarter of the current financial year, more so the first quarter of the current financial year that will show a significant impact of the crisis.

Remember, the crisis is not so much about supply. It is more about pricing. You're still getting oil as you wanted, you're still getting supply of gas, you're getting LNG.

The challenge is on LPG, but that's also because we have a characteristic in terms of a concentration in Middle East. But it's more of a price shock rather than an availability shock. And the price shock is also impartial because it is the producers who are bearing it right now and the consumers are not yet bearing it.

If the government starts to increase the price of petrol and diesel, the direct impact will come on consumer balance sheets and then there will be a double whammy. For now, the consumer balance sheets have been predicted and the producer balance sheets are being compared to take a shock.

Govindraj Ethiraj: Right. As you look ahead, what do you think policymakers need to guide in terms of where this could go and what would you expect given what we know already and all the factors you pointed out, including the absorption of the price shocks?

Garima Kapoor: See, I think policymakers are treating this exactly like a COVID crisis, an external crisis for which you have no control. And it is going to impact your supply chains first and then also impact your demand. The only difference being that COVID is also an income shock.

This is not an income shock. So the ability to manage has much more, I should say, degrees of freedom than probably COVID. So the policymakers are responding by taking the shock on the balance sheets.

The government is telling you, I'm not hiking the prices of anything. I'm going to give you as much increase in fertiliser subsidy as is needed. I'm going to take about a lakh crore of shock in terms of higher subsidies, even for your LPG cylinder.

And I've cut your petrol and diesel excise duty. Till such time, I have evidence that this is short term. Moment the government starts to look at this as a more prolonged and a continuing feature, I think the response will start in allowing some pass through to consumer balance sheets.

As of now, the only reason they've not done it is because looking at is more short term and ceasefire does tell you that we are closer to the conclusion or some solution. Second, RBI is dealing with it a very typical way as it is. I'm going to look through the impact on inflation.

Till such time, it does not look to be permanent and durable in nature. Until such time, your inflation does not reach 6 percent and I can see inflation expectations rising measurably. So I do not anticipate both policymakers, the government as well as RBI to give any shock in our treatment because the government and RBI give shock in our treatment and take any measures.

Let's say the RBI decides to hike rate, then it could lead to further tightening of financial conditions and could kill whatever little growth is left in the system. So in my view, moment the signal is that this is not ending anytime soon. Anytime soon, I think at least by first quarter of the current financial year, the government will look to pass through some impact of this, let's say in hiking petrol and diesel prices, a nominal increase to start up with.

But broadly, I do believe because we enter this crisis with very strong balance sheets, very low inflation, very good macro stability, our ability to withstand the shock is much, much superior than let's say a Russia-Ukraine crisis, which happened soon after exit from COVID. So I do not see policymakers panicking soon.

Govindraj Ethiraj: Right. Garima, thank you so much for joining me.

Garima Kapoor: Thank you, Govind.

The Deepening Pilot Fatigue Crisis

Two Indian commercial pilots died within 48 hours of each other last week as the Airline Pilots Association of India, or ALPA, has now blamed the government's two-year delay in implementing flight safety rules for a deepening pilot fatigue crisis in the country, according to a report in The Wire.

ALPA has now urged the Director General of Civil Aviation to reject any proposals from airlines seeking relaxation in flight duty time limitations or FTTL norms following the deaths of those two pilots. ALPA has also called for a time-bound roadmap to fully implement the revised FTTL regulations along with transparent and accountable fatigue reporting mechanisms featuring quarterly public disclosures, according to a NDTV report. The association also demanded that pending enquiry reports and medical fitness data be disclosed to strengthen oversight and accountability.

The two pilots, one from Air India, suffered a heart attack during a layover in Bali and the other suffered a heart attack during a ground training session in Bangalore. This was on April 29th and April 30th. ALPA also said that airlines might be trying to hide the true extent of the exertion facing the country's pilots and that airline operators were discouraging and penalising pilots for reporting fatigue and were rejecting reports that pilots were filing.

I reached out to Captain Sam Thomas, President of the Airline Pilots Association, and I began by asking him how he was seeing the linkage between the flight duty time limit norms and the recent and unfortunate deaths of the two pilots.

INTERVIEW TRANSCRIPT

Captain Sam Thomas: Firstly, condolences to the family of the departed and this is not the first time that this particular incident is happening. Over the last three years, we've lost more than 20 pilots. Just to get a basic idea of what exactly is happening, unfortunately in India, mental health and fatigue are two almost taboo subjects and nobody really wants to talk about that.

Now, it's pertinent in the life of a pilot and we've been raising this issue for the last 10 years now. We've repeatedly written to the regulator. Unfortunately, what has been happening is the airlines are able to prevail over the regulator at all times to dilute these standards that are set forth in the civil aviation requirement that is promulgated by the DGCA.

Now, the DGCA believes not in sort of paradigm shifts in their thought process. What they do is a small incremental change in the name of modernisation or catching up with the times. Now, the pioneer in this is NASA on studies done about fatigue and they have put out very many papers and that is what forms the basis of flight duty time limitations in advanced countries.

Unfortunately, in India, we cut, copy, paste and then we have this bureaucratic process of putting it out in the open domain and asking for comments. This is a clandestine manner of informing the airlines that we are going to promulgate this and you need to come up with something that is attractive to us so that we may dilute these civil aviation requirements. This has been happening over time and n number of pilots have reported fatigue.

We force the DGCA's hand to say that, hey, at least allow the pilots to report fatigue. DGCA in turn, instead of taking up the fatigue reports themselves, ask the airlines to take up the fatigue report. Now, the airlines, particularly the management pilots with fancy titles like, you know, senior VP operations, VP operations and those kind of people have rejected the fatigue reports of more than 95% of the pilots.

Therefore, the pilots now have decided that we will not report fatigue because it's punitive. The moment you report fatigue, it's turned down and you are marked sick and therefore, you lose a day of pay. That's where we are at the moment and the fatigue, it's a little bit more serious and then you have people just falling off the shelves.

Govindraj Ethiraj: Right. So, in terms of, let's say, the average or median time that pilots have to spend in the air or in the aircraft or in the cockpit to be more specific, how would that compare, just to refresh the memory of our listeners as well, compared to other countries or what you feel is a global benchmark?

Captain Sam Thomas: It's a very, very difficult point to put out in comparison with the global benchmark. Please allow me some time, I can tell you with some crude examples which may not be too technical and as simple as I can make it. Say, for instance, in the United States, a person works for 12 hours out of which he's allowed to fly for 8 hours.

Now, if he were to leave his house, he has a lovely road, he has no problems, he drives to his office, everything is set, he has a published roster, he knew one month in advance that this is the flight he's going to do and he does that flight, he's not jumping from aircraft to aircraft and he comes back, he drives back to his house, absolutely stress-free, no great weather-related activities in those countries and things are pretty organised and thereby less stressful.

Compared to somebody in India, let's take the same 12 hours and 8 hours of flying, he goes from his house which is at least an hour and a half away from the airport in a very stressful drive, goes through a medical checkup, goes through this CISF security like every other passenger, then reaches the aircraft, goes from Bangalore to Mumbai, thereafter waits there for 3 hours, then goes from Mumbai to Indore, waits there for another 3 hours and then comes from Indore to Chennai, Chennai to Bangalore, then he has to go all the way back, despite the fact that we are keeping the 12 hours of duty and 8 hours of flying time constant. Now, the stresses that he undergoes is way, way different from what some of the advanced countries and some of the developed countries' pilots have to go through and add to that is the weather phenomenon in India.

As you've been travelling so much, you can see that we have pre-monsoons, impossible to fly. Now, added to that is the two factors that come in which is ailing the pilots at the moment. One is the fatigue, the other is the stress.

Both are complementary. Stress induces fatigue and fatigue induces stress. Now, we have no organisation in India that can go into these studies and actually quantify as to what the pilots are going through.

So, therefore, we are saying that let's err on the side of caution and not let the pilots push themselves to a particular point where they are falling off the shelves as I've told you earlier. What we can do is if you have a collaborative effort, we can tell you how this can be mitigated. It's not rocket science.

It's just not rocket science. It's very simple. So, the factors that are affecting this implementation of this FDTL are basically the airlines putting commercial interests well over the flight safety aspect of flying.

Govindraj Ethiraj: So, if I were to ask you what then would be the ideal metric for an Indian pilot in terms of hours spent in the cockpit or on duty, given all the other factors that you pointed out, what would that be then?

Captain Sam Thomas: To be fair to the airlines, we'd like to have the new FDTL which was very much pro-airline implemented in totality. Now, the moment that CAR was promulgated, you saw what Indigo did in December. Thereafter, you had this war situation.

Now, the war situation is always overhyped. The Pakistan airspace is closed. It's not the end of the world.

Iran is closed. It's not the end of the world. Now, if you felt that that was such a major issue, how come you did not stop flights throughout this war to the Gulf countries?

Every Gulf country was being hit by Iran. Every flight that was operated was a sort of death warrant. But the operations in charge did not think it necessary to curtail those flights.

Now, they are curtailing the flights because the fuel rates have gone beyond what they would like it to be, which is fair enough. But at the same time, if Pakistan and the Gulf were such big factors, you can go down the south, like from the simple thing, Bombay, Vienna, Vienna, New York. It used to be a very old flight pattern.

You had a layover in Vienna. The other set of crew took it over to New York, had a layover, came back, and this was a set pattern. It used to be Vienna, Brussels, Frankfurt, Paris, or London.

So, these are set patterns that used to be there. Now, somehow, there is an involvement of people, particularly the human resources, who have no intelligence as far as flying is concerned. And they have expanded the operations so much, with no corresponding betterment or increase in the infrastructure.

At the same time, putting in huge reservations on the pilot and getting a punitive regime in place. So, that is what is ailing. If there is a collaborative effort, we can sit down and nothing is impossible to solve, is our submission.

Govindraj Ethiraj: Last question, Captain. So, the deaths are unfortunate, but I'm just wondering, if you were to look at other airlines, or let's say the airline industry of other countries, would you say that there are no casualties in those airlines in those countries? Are we definitely different?

Or is this something that from a pure proportion wise, happening elsewhere in the world too?

Captain Sam Thomas: See, let's keep the proportions and statistics aside, they tend to mislead. Now, as far as the casualties in other countries are concerned, yes, there have been, but negligible. Now, in India, it's like you take the average life of a pilot now, and thank God, we flew the golden era.

I mean, we'd like to call that the golden era because we were not in such a rat race. A 21 year old kid joins, pays one and a half crores, joins one of these low cost airlines, then is flying from nine to God knows where, he reaches home, he doesn't know what's happening. Family life is down the drain.

The data that we have, we collect a lot of data along with the Flight Safety Matters Foundation. And we get accurate data because these guys open up to us, because we are non-punitive, there's no way we can punish them. So, to your question of whether it's lopsided when it comes to death due fatigue and related anxieties in India, absolutely correct.

There is a huge difference, and the stresses are taking over completely with the pilots not able to do anything about it. In the other developed countries, people will just walk away, say that, look, I'm stressed, I don't want to fly this, I'd rather be a bus driver, or you know, I'll go do something else. And the management respects that, the country respects that, and the people respect that.

Here, unfortunately, that's not the case. People will mark you sick, people will cut your leave. That's how this 40 hour contracts have come up.

Every possible avenue of inducing stress is being followed by the airlines inadvertently. Some of them, they're not aware. It's just that the people handling these issues are non-professionals.

So is it in the regulator and the ministry. So, we have quite a task on our hand at the moment.

Govindraj Ethiraj: Right, Captain, thank you so much for joining me.

Captain Sam Thomas: Thank you, Govind.

No Aura Farming for Abel

The new Berkshire Hathaway CEO, Greg Abel, has earned wide praise from shareholders for his leadership and management abilities, but the aura created by his predecessor and mentor Warren Buffett has begun to fade, according to a Reuters report, which pointed out that empty seats and diminished crowds were noticeable throughout Berkshire's annual shareholder weekend in Omaha, Nebraska, the first since Abel succeeded Buffett as CEO in January, according to the Reuters report. While Abel presided at Berkshire's annual meeting in a arena without Buffett on stage, the 95-year-old Buffett watched from the audience and spoke briefly there.

The report says shareholders came away impressed with Abel's knowledge of Berkshire's operations, which span industries from insurance, railroads, manufacturing, energy, and retail. But he's not the same draw as the Oracle of Omaha or late Vice Chairman Charlie Munger, who died in 2023, who viewed themselves more as teachers when regaling shareholders in decades of prior meetings, according to the Reuters report. One private investor told Reuters that he was a little bit disappointed because in previous years, Warren Buffett and Charlie Munger sat on the stage sharing their investing experiences and life experiences and philosophies.

Rajasthan Royals Acquired Indian Tycoons

This year, he did not hear something like that. A consortium led by steel billionaire Lakshmi Mittal and Adar Poonawalla will acquire the cricket team Rajasthan Royals in a deal valued at $1.65 billion, according to a Bloomberg report. Mittal is the largest shareholder of ArcelorMittal, will own about 75% equity in the IPL or the Indian Premier League team, along with his family, according to a statement released on Sunday.

Adar Poonawalla will own about 18% in the team, while existing investors will retain about 7%. And there are lots of deals happening. Earlier, United Spirits sold its stake in Royal Challengers Bangalore to the Aditya Group, Blackstone, Times of India and Bolt Ventures for about $1.8 billion in March.